Qualcomm: chips off the block

Tech group should not split off its chipset business

Boutique banks: small is beautiful

Owners start to think about cashing in

HSBC: making withdrawals

Balance must be struck between cherry picking the strongest markets and ensuring long-term coherence

Virtu Financial: think fast and slow

Computerised trading does not require many humans

Pump jacks are seen at dawn in an oil field over the Monterey Shale formation in California, US
©Getty Images

Oil production: shale off

Price weakness is not coming to an end

Etsy/Party City: fancy dress

Glittery and cheap or homemade and quaint? Both come with an overpriced stock

Fortescue Metals: a thousand cuts

Australia’s third-largest producer is in a bind

TSMC: Moore or less?

Group’s business model has proved resilient but it faces threats

Goldman Sachs: principles and agent

US investment bank may just be returning to its heritage

Low-cost airlines: sitting comfortably?

Today’s budget airline customer wants to feel the love

  • The math behind Heinz/Kraft

    Missing from the press release on the Kraft Heinz deal is just how much explicit value Kraft shareholders are getting. It’s an odd structure where Kraft gets 49 per cent of the new company PLUS a one-time dividend of $16.50.

    Kraft shares have traded up to more than $80.

  • Ocado, mashed into guacamole

    Lex has a tricky realtionship with go-go e-retail businesses. Their valuations – that is, the relationship of their stock prices to their profits – imply long-term growth rates inconsistent with the normal competitive pressures in retail. So mostly we make surly comments about them. There is, however, another side of the story. Online retail leadership does seem to persist. So in a recent note about Ocado, the UK grocer, we departed a little from our previous dour tone, and tried to articulate the bull case. Here is our summary:

    [sceptics about Ocado's valuation] have failed to accept the core principles of online retail investors. Namely that much more of the market will convert to online; that the leader online, because of economies of scale, will never be overtaken by the also-rans; that margins online will expand beyond those of the traditional competitors; and that the bricks-and-mortar leaders will never become digitally competent. Accept this catechism, and all else follows. It is easy to doubt the four together, but in Ocado’s case, no one of them is obviously wrong, either.

  • Letter from Lex – Thinking big, a little

    There is a technical problem with the “data warehouse” at FT HQ (we are told) and that makes sending out our subscriber email impossible this week. So we’ve posted it here. Onwards!

    Readers,

  • The £7bn problem with a BT breakup

    Last week Lex kicked around the possibility that BT would spin off or otherwise separate its network division, Openreach. BT’s competitors, such as TalkTalk and Sky, depend on Openreach’s wires. They suggest that BT is (to exaggerate their view slightly) under-investing in the Openreach network and using the monopoly profits from it to subsidize its other businesses. It’s not very clear to Lex that a spin-off would lead to better service. But whether it would or not, Claire Enders of Enders Analysis has pointed out another little problem with the spin-off idea: that BT’s mountainous pension liabilities make it effectively impossible. She writes:

    In any spinoff of Openreach, the government would have to consider whether to keep the pension fund obligations with BT, spin them off with Openreach, or split them between the two. The pension fund trustees might have to approve the plan, or at least set conditions for it. Crucially, the Crown Guarantee would also have to be considered.

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